President Donald Trump on Tuesday signed into law a steep tariff on imported solar panels, a move billed as a way to protect American jobs but which the solar industry said would lead to tens of thousands of layoffs.
The following are some questions and answers about the decision:
What impact will the decision have on the solar industry?
Trump has said the tariff will lead to more U.S. manufacturing jobs, by preventing foreign goods that are cheap and often subsidized from undercutting domestic products. He also expects foreign solar panel producers to start manufacturing in the United States.
“You’re going to have people getting jobs again and we’re going to make our own product again. It’s been a long time,” Trump said as he signed the order.
The main solar industry trade group, the Solar Energy Industries Association, has a different view: It predicts the tariff will put 23,000 people out of work in the panel installation business this year by raising product costs and thus reducing demand.
Research firm Wood Mackenzie estimated that over the next five years the tariffs would reduce U.S. solar installation growth by 10 to 15 percent. The United States is the world’s fourth-largest solar market after China, Japan and Germany.
Research firm CFRA analyst Angelo Zino said he expected any added manufacturing jobs would be “minimal” given the 18 months to two years it takes to build and ramp up a new production facility and the industry’s shift toward automation.
Who wanted the tariff?
The main beneficiaries of the tariff include U.S.-based solar manufacturers Suniva and SolarWorld.
Suniva filed for bankruptcy in April, days before it filed the petition for trade relief. The Georgia-based company argued it could not compete with the cheap imports that have caused panel prices to fall more than 30 percent since 2016. It was later joined in the petition by SolarWorld. They asked the Trump administration for the equivalent of a 50 percent tariff.
Suniva is majority-owned by Hong Kong-based Shunfeng International Clean Energy, and SolarWorld is the U.S. arm of Germany’s SolarWorld AG.
Suniva called the tariffs “necessary,” while SolarWorld said it was “hopeful they will be enough.”
Most other U.S. solar companies, including SunPower, which manufactures panels in Asia, and residential installer SunRun Inc. were opposed to the trade barrier — as were offshore manufacturers such as China’s JinkoSolar, which will be among the biggest losers.
Solar manufacturer and developer First Solar supported the tariffs, and is likely to be among the biggest beneficiaries. First Solar makes panels using cadmium telluride that are excluded from the trade case. The company has seen an increase in demand for its unique technology.
Will the tariff lead to a trade war?
China branded the move an “overreaction” that would harm the global trade environment.
“The U.S.’s decision … is an abuse of trade remedy measures, and China expresses strong dissatisfaction regarding this,” said Wang Hejun, the head of the commerce ministry’s Trade Remedy and Investigation Bureau. “China will work with other WTO [World Trade Organization] members to resolutely defend its legitimate interests in response to the erroneous U.S. decision.”
Trump dismissed worries of trade retaliation.
“There won’t be a trade war. It’ll only be stock increases for companies that are in our country,” he said.
How does the tariff fit into Trump’s energy policy?
If the tariff cools growth in the U.S. solar industry, it could help Trump’s effort to support the coal industry — which competes with renewable energy technologies for a share of the nation’s power generation market.
Trump campaigned on a promise to revive the ailing coal mining sector and boost U.S. production of other fossil fuels as a way to create jobs and bolster American influence overseas.
He has also downplayed the threat from global warming — an issue that led past administrations to throw their support behind emissions-free solar and wind energy development — rolling back climate change regulations and pulling the United States from a global pact to combat it.